The United Auto Workers union announced Saturday that it has reached a tentative agreement on a new labor contract with Stellantis, the parent company of Chrysler, Jeep and Ram.
The agreement comes three days after the union and Ford Motor Co. announced a tentative agreement on a new contract. The two agreements contain many identical or similar terms, including a 25% general wage increase for UAW members and the possibility of cost-of-living wage adjustments if inflation spikes.
“We have secured a record-breaking contract,” UAW President Sean Fein said in a video posted to Facebook. “We truly believe that we have gotten the best possible return from the company.”
Immediately after announcing the tentative agreement with Stellantis, the union expanded its strike against General Motors, demanding layoffs from workers at the company’s Spring Hill, Tennessee, plant. The plant produces sport utility vehicles for GM’s Cadillac and GMC divisions.
Under the tentative new contract with Stellantis, Stellantis will reopen its Belvidere, Illinois, factory to produce mid-size pickup trucks and rehire enough workers to handle two production shifts, Fein said. He said he agreed to do it.
The union also received commitments to keep the engine plant in Trenton, Michigan open and to maintain and expand the machine shop in Toledo, Ohio. The union says these moves will create up to 5,000 new UAW jobs.
Fein said the union also gained the right to strike if the company shuts down plants or fails to deliver on promised investment plans.
“If the company retracts its statement about any factory, we can slam them hard,” he said.
Fein said Stellantis employees will now return to work.
“We look forward to getting our 43,000 employees back to work and getting back to work serving our customers,” Stellantis said in a statement.
A tentative agreement with Stellantis would require approval by the union council that oversees negotiations with the company, and would then need to be ratified by UAW members. Fein said the council is scheduled to meet Thursday.
Stellantis deal means General Motors is the only one that hasn’t yet reached an agreement with the UAW
Eric Gordon, a business professor at the University of Michigan who studies the auto industry, said the new contract comes as the Detroit manufacturer ramps up production of electric vehicles and competes with rivals that operate non-union factories. He said it would impose increased labor costs.
“The Detroit Three are entering a new and dangerous era,” he said. “They need to figure out how to transition to EVs and do it at a cost structure that is unfavorable to their global competitors.”
The union’s contracts with the three automakers expired on September 15th. Since then, the union has called on more than 45,000 auto workers at three companies to leave their jobs at factories and 38 parts warehouses across the country.
The latest escalation of the strike at Stellantis was on Monday, when the UAW directed workers to strike at the Ram plant in Sterling Heights, Michigan, which makes the popular 1500 pickup truck. The strike halted production of the Jeep Wrangler and Jeep Gladiator at the Toledo, Ohio, plant and 20 Stellantis parts warehouses.
Unions have been negotiating similar contracts with the three automakers for decades in a process known as pattern bargaining. Similar to the deal with Ford, Stellantis’ interim contract would increase the UAW’s top wage from $32 an hour to more than $40 an hour over four and a half years. That would mean an employee working 40 hours a week would earn about $84,000 a year.
Stellantis, GM and Ford began negotiations with the UAW in July. The companies have sought to limit rising labor costs, which are already higher than automakers such as Tesla, Toyota and Honda, which operate non-union factories in the United States.
The three major U.S. automakers are also trying to contain costs, investing tens of billions of dollars to develop new electric vehicles, build battery factories and renovate factories.
Amsterdam-based Stellantis was formed in 2021 through the merger of Fiat Chrysler and French automaker Peugeot. The company’s North American operations, based near Detroit, are its most profitable.
Stellantis recently surprised analysts by posting profits that far exceeded those of GM, the largest U.S. automaker by sales. Stellantis earned 11 billion euros ($11.6 billion) in the first half of this year, while GM earned nearly $5 billion.
Norm Scheiber Contributed to the report.